Grow Companies and Accelerate Clean Growth Roundtable
August 22, 2016—Montreal, QC
Grow Companies and Accelerate Clean Growth
Hosted by Janie Béïque
Area of Focus
The participants were asked the following three questions related to growing leaders in innovation:
- How can Canada better support the scale up of companies into billion dollar players?
- Are there market based approaches to encourage wider adoption of clean tech by the private sector?
- How can government research and procurement be more effective in supporting innovative companies?
- The Government can create a "demand pull" for technological, social and environmental innovations of Canadian companies through public procurement and forward-looking regulations.
- Technology companies need support from specialized investors.
- Entrepreneurial success should be recognized.
Summary of Discussion
Participants underlined several key issues and offered a range of solutions such as: measures to promote an entrepreneurial culture; financing and expert advice at all stages of the innovation cycle; the importance of anchor customers from the public and private sectors to the success of innovative start-ups; and new approaches to support capital intensive innovations sectors such as health sciences and clean technologies.
Key Implementation Considerations/Challenges
Financing—"smart money": From early to later stages, start-ups need to be supported by investors with deep sector-specific experience to improve the success rate. Many funds with such experience will need support to be properly recapitalized. Clean technology and life sciences sectors require longer-term investment cycles and financing adapted to such reality.
Anchor customers: Technology companies require a "first customer" to validate their offering but in Canada this is difficult due to a small pool of anchor companies and public procurement processes that are overly focused on price rather than local sourcing, quality, new innovations.
Talent: We need to promote and increase the number of Canadian youth pursuing technical trades and promote entrepreneurialism in our schools.
Acquisition for growth: More recently, Canadian firms are successfully pursuing growth through aggressive foreign acquisition strategies others have been sold due to a lack of growth financing. Only a few firms have successfully raised financing through IPOs. Companies needed access to a variety of funding sources, including a large public private growth fund, with different objectives and exit horizons to support their growth and investment strategies.
Capital intensive technologies: The longer development cycles and substantially larger amount of financing required for companies in sectors such as life sciences, clean technology, and forest products require adapted support. Early stage programs like Sustainable Development Technologies Canada are good but there is a gap at later stages.
Growing companies: Government support could be focused on firms that demonstrate growth aspirations. Many firms need strategic planning and market intelligence information. The number of programs could be reduced and focused while remaining flexible and the Scientific Research and Experimental Development program could be adapted to ensure growing firms remain eligible. Firms need coaching on new opportunities provided by the implementation of the trade agreements and on international best practices.
Complacency: Promoting excellence is crucial to overcoming a Canadian tendency to be comfortable. Also, Canada should rebrand itself from natural resources country to innovative country.
Growing firms: The Government could develop a competition led by the Prime Minister and select a number of firms that would participate in a tailored growth program supported by all arms of the government. Funding should be focused and program budgets should have three to five year timelines, with contingency plans to allow continuing support in case of market turbulences. The Government should organize trade missions within Canada as well as abroad.
Developing talent: The Government could develop national awards or marketing campaigns to raise the profiles of successful entrepreneurs who have achieve important milestones in their development like Initial Public Offering etc; provide university graduates with incentives (such as student loan forgiveness) to launch or work in start-ups.
Public procurement: Forward-looking public procurement could improve the efficient use of government funds and support innovative companies. For example, through the accelerator Inno-Cité, start-ups can test their products or services for the City of Montreal.
Capital intensive innovation: The Government should draw on the sector expertise of Sustainable Development Technology Canada and enhance the funding capabilities of the Business Development Bank of Canada and Export Development Canada to support large, capital-intensive environmental projects and innovations. The Government could consider flow-through-shares for sectors beyond natural resources and allow thereby the public to participate in the innovation.
Growth-stage financing: The Government could provide matching funding with large investors with industry specializations to support technology companies that are scaling up internationally, through initiatives like the Venture Capital Action Plan.
Regulating for technological, environmental and social innovation: Regulations could be adapted to create "demand pull" for private sector development and adoption of new technologies from Canadian firms. Government financing of companies could include measures to optimize their social, environmental and economic impacts. Some Canadian standards or regulations should be matched to United States, for example, the Food and Drug Administration to greatly reduce time to market of a new drug.
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